Former Mahopac fire official Michael Klein facing federal charges

Investigators are trying to find out what happened to $5 million missing from the coffers of the Mahopac Volunteer Fire Department. Michael Klein, the former department treasurer, has resigned.
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State authorities are investigating reports of missing funds at the Mahopac Volunteer Fire Department. This is department headquarters at Route 6 and Croton Falls Road.(Photo: David McKay Wilson/The Journal News)Buy Photo

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Former treasurer Michael Klein was charged with wire fraud and subscribing to false tax reports

Michael Klein, the former treasurer of the Mahopac Volunteer Fire Department, was arrested Wednesday on federal charges alleging he embezzled $5.7 million from the department so that he could live the high life, with a luxury yacht, Florida condominium and fancy jewelry.

U.S. Attorney Preet Bharara said in a statement announcing the arrest that Klein, 48, carried out the scheme over 13 years as treasurer of the nonprofit fire department.

"Public corruption victimizes the public generally, but here, the people of Mahopac and its volunteer firefighters have suffered specifically and directly, having lost almost $6 million that could have been used for good, but instead was allegedly squandered away by Klein,” he said.

Klein, who surrendered to authorities, was charged with one count of wire fraud, and six counts that he submitted false tax returns for the years 2009 to 2014.

Dressed in gray suit with a white shirt and blue-striped tie, he appeared before U.S. Magistrate Judith McCarthy in White Plains federal court late Wednesday afternoon, where he was released to his Florida home on a $500,000 bond.

McCarthy also placed restrictions on the sale of any property valued at more than $1,000. Bharara had called for such oversight, noting that Klein had sold the 55-foot yacht he'd bought for $229,000 for just $136,850 while he was cooperating with federal agents investigating the embezzlement scheme. The yacht is now back on the market for $260,000.

The federal complaint unsealed in U.S. District Court alleges that:

• From January 2002 to September 2015, Klein embezzled department funds by writing more than 275 checks for more than $5.7 million to his two businesses, Abbie Graphic Services and Buckshollow Emergency Equipment Corp.

• Klein listed checks on the MVFD’s books as payments to other vendors that sold firefighting equipment or services.

• He used the taxpayer funds money to purchase, among other things, yachts, including a 55-foot Neptunus motor yacht named “K’Bam;” a vacation home in Palm City, Florida; and jewelry. He also used the money to support his two companies.

The case began with the Putnam County District Attorney's office and was ultimately put together by the IRS, FBI, New York State Police, and the New York state comptroller in conjunction with the U.S. Attorney's office.

So far, Klein is the only one person charged in the embezzlement. His attorney, Jeremy Saland, in a written statement, maintained that Klein went to the authorities on his own accord to initiate the investigation, and has been cooperating ever since.

It was the first statement from Klein's legal team since Tax Watch broke the story about the investigation into the department's finances in October, 2015.

"While everyone is fallible, it is Mr. Klein who on his own accord went to the DA's office and ultimately the US Attorney's office to initiate the investigation and continue his cooperation with law enforcement," Saland said in a statement. "Mr. Klein has taken and will continue to take the steps as best he can to assist the same community he admirably served during his years as a firefighter to move forward while also addressing the accuracy of the charges pending against him."

MVFD spokesman Ed Scott said the department had become suspicious of Klein's financial stewardship in the summer of 2015, and was investigating discrepancies in its financial records when Klein turned himself in in late September to then-Putnam County District Attorney Adam Levy.

"The department is pleased the case is moving forward," said Scott. "We are hoping that justice does serve its true purpose."

Scott said the MVFD Board of Commissioners never reviewed the cancelled checks that Klein wrote to his own companies. Those transactions, said Scott, were not included on financial reports Klein provided the board. Its accountant during Klein's tenure was Joel Rosenberg, of RRC Price & Co CPAs PC of Bardonia. Rosenberg lost the MVFD contract this year.

There was much discussion in McCarthy's courtroom over what was to be done with the guns owned by Klein, his son, and Buckshollow Emergency Equipment, where Klein holds a federal firearms license. Klein said he has 120 firearms in his inventory, including handguns and rifles.

McCarthy ordered Klein to surrender the guns he owns in Mahopac and Florida and hand over the keys to Buckshollow to his father. Klein's son also will have to remove his hunting rifles from the home of Klein's mother, on Bloomer Road, where Michael Klein stays when he is in New York.

The Buckshollow shop, located on Secor Road in Putnam Valley, is having a "store closing" sale, with 25 percent off all merchandise, which includes handguns, knives, and ammunition as well as clothing worn by police and emergency responders. Buckshollow sold goods regularly to police and fire agencies in the region. Its biggest client between 2012 and 2015 was the the Putnam County Sheriff's office, which rang up sales of close to $300,000.

Assistant U.S. Attorney James McMahon said federal authorities feared that Klein would continue to dispose of his assets, as he did with the luxury yacht. The government hopes to recover some money from Klein, which would be used to provide some recompense for the taxpayers who fund the Mahopac Volunteer Fire Department, a private entity that contracts annual with the town of Carmel for fire services.

"We have a victim here - the taxpayers of the town of Carmel," said McMahon. "We need to get him under supervision to stop the dissipation of assets."

The MVFD is among three volunteer departments that serve Putnam County's largest town. It's a high-profile department, with its grand firehouse at the corner of Route 6 and Croton Falls Road. Among its influential members are Carmel Town Supervisor Ken Schmitt and Putnam County Undersheriff Peter Convery.

Klein's tenure as Fire Department's treasurer began in 2001. He resigned in late September after the department and authorities began probing apparent financial irregularities.

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MVFD spokesman Ed Scott said he was pleased the case was moving forward.(Photo: David McKay Wilson/The Journal News)

The volunteer fire department received $2.1 million in taxpayer funds in 2015 to provide fire and emergency services to residents in its coverage area.

The Town Board cut funding to the department by $500,000 for 2016, which department spokesman Ed Scott told The Journal News had recently delayed plans to purchase new trucks.

Among the reforms that emerged from the current troubles: residents and business owners that live within the fire district can attend meetings of the department’s board of directors. Perhaps you'll hear more about the reforms at Its next meeting on June 20, at 7:30 p.m. at the fire house at 741 Route 6, Mahopac.